Question 1

Everything else remaining the same,as the economy enters an expansion,

Accepted Answer

A) tax revenues rise and transfer payments fall. 
B) tax revenues and transfer payments fall. 
C) tax revenues and transfer payments rise. 
D) tax revenues fall and transfer payments remain constant. 
E) transfer payments and interest on the debt rise. 
A) tax revenues rise and transfer payments fall. 
B) tax revenues and transfer payments fall. 
C) tax revenues and transfer payments rise. 
D) tax revenues fall and transfer payments remain constant. 
E) transfer payments and interest on the debt rise.

Question 2

An income tax ________ potential GDP by shifting the labour ________ curve ________.

Accepted Answer

A) increases;demand;rightward 
B) decreases;demand;rightward 
C) increases;supply;rightward 
D) decreases;supply;leftward 
E) increases;supply curve and labour demand curve;rightward 
A) increases;demand;rightward 
B) decreases;demand;rightward 
C) increases;supply;rightward 
D) decreases;supply;leftward 
E) increases;supply curve and labour demand curve;rightward

Question 3

The category of federal government revenues that fluctuates the most is

Accepted Answer

A) investment income. 
B) transfer payments. 
C) personal income taxes. 
D) debt interest. 
E) indirect taxes. 
A) investment income. 
B) transfer payments. 
C) personal income taxes. 
D) debt interest. 
E) indirect taxes.

Question 4

If outlays exceed revenues,the government's budget balance is ________,and the government has a budget ________.

Accepted Answer

A) negative;deficit 
B) positive;surplus 
C) positive;deficit 
D) negative;surplus 
E) zero;surplus 
A) negative;deficit 
B) positive;surplus 
C) positive;deficit 
D) negative;surplus 
E) zero;surplus

Question 5

Use the figure below to answer the following questions.
   
Figure 29.3.1
-Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.If real GDP equals $550 billion,the structural deficit is

Accepted Answer

A) zero. 
B) $60 billion. 
C) a surplus of $60 billion. 
D) a surplus of $40 billion. 
E) unknown given the available information. 
A) zero. 
B) $60 billion. 
C) a surplus of $60 billion. 
D) a surplus of $40 billion. 
E) unknown given the available information.

Question 6

Consider all the effects of fiscal policy.An income tax cut

Accepted Answer

A) increases both real GDP and the price level. 
B) increases real GDP but decreases the price level. 
C) increases real GDP but leaves the price level unchanged. 
D) increases real GDP and the price level may rise or fall. 
E) does not change real GDP or the price level. 
A) increases both real GDP and the price level. 
B) increases real GDP but decreases the price level. 
C) increases real GDP but leaves the price level unchanged. 
D) increases real GDP and the price level may rise or fall. 
E) does not change real GDP or the price level.

Question 7

Fiscal policy is

Accepted Answer

A) the use of the federal budget to achieve macroeconomic objectives. 
B) any policy by the Bank of Canada. 
C) budgeting policy by aggregate households. 
D) any attempt by the federal government or Bank of Canada to control inflation. 
E) effective only when the federal government has a budget surplus. 
A) the use of the federal budget to achieve macroeconomic objectives. 
B) any policy by the Bank of Canada. 
C) budgeting policy by aggregate households. 
D) any attempt by the federal government or Bank of Canada to control inflation. 
E) effective only when the federal government has a budget surplus.

Question 8

Currently the government of Ricardia has outlays equal to $100 billion,and a tax scheme that is related positively to real GDP by the following equation: Taxes = $25 billion + 0.1(real GDP).What are autonomous taxes in Ricardia?

Accepted Answer

A) It depends on the level of real GDP. 
B) 0.1 
C) $2.5 billion 
D) $250 billion 
E) $25 billion 
A) It depends on the level of real GDP. 
B) 0.1 
C) $2.5 billion 
D) $250 billion 
E) $25 billion

Question 9

Use the figure below to answer the following questions.
   
Figure 29.3.1
-Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.Discretionary fiscal policy would be shown as a movement

Accepted Answer

A) from right to left along the revenues curve. 
B) from left to right along the revenues curve. 
C) from right to left along the outlays curve. 
D) from left to right along the outlays curve. 
E) none of the above. 
A) from right to left along the revenues curve. 
B) from left to right along the revenues curve. 
C) from right to left along the outlays curve. 
D) from left to right along the outlays curve. 
E) none of the above.

Question 10

The Laffer curve is the relationship between

Accepted Answer

A) government expenditure and potential GDP. 
B) the tax rate and potential GDP. 
C) tax revenue and potential GDP. 
D) the tax rate and the amount of tax revenue. 
E) government outlays and revenues. 
A) government expenditure and potential GDP. 
B) the tax rate and potential GDP. 
C) tax revenue and potential GDP. 
D) the tax rate and the amount of tax revenue. 
E) government outlays and revenues.

Question 11

Use the figure below to answer the following questions.
   
Figure 29.3.1
-Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.If potential GDP is $750 billion,and actual real GDP is $650 billion,the cyclical deficit is

Accepted Answer

A) zero. 
B) $60 billion. 
C) $40 billion. 
D) equal to the structural deficit. 
E) $180 billion. 
A) zero. 
B) $60 billion. 
C) $40 billion. 
D) equal to the structural deficit. 
E) $180 billion.

Exam 29: Fiscal Policy

Everything else remaining the same,as the economy enters an expansion,

An income tax ________ potential GDP by shifting the labour ________ curve ________.

The category of federal government revenues that fluctuates the most is

If outlays exceed revenues,the government's budget balance is ________,and the government has a budget ________.

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.If real GDP equals $550 billion,the structural deficit is

Consider all the effects of fiscal policy.An income tax cut

Fiscal policy is

Currently the government of Ricardia has outlays equal to $100 billion,and a tax scheme that is related positively to real GDP by the following equation: Taxes = $25 billion + 0.1(real GDP).What are autonomous taxes in Ricardia?

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.Discretionary fiscal policy would be shown as a movement

The Laffer curve is the relationship between

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.If potential GDP is $750 billion,and actual real GDP is $650 billion,the cyclical deficit is

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An income tax potential GDP by shifting the labour curve .

If outlays exceed revenues,the government's budget balance is ,and the government has a budget .